TaxTMI 
TaxTMI 
2016 (8) TMI 998
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.... in this appeal are as under :- (1) The Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 32,75,430/- on account of disallowance u/s 14A r.w.s. 8D without properly appreciating the facts of the case and the findings brought out by the AO.. (2) On the facts and circumstances of the case, the Ld.CIT(A) ought to have upheld the order of the Assessing Officer. 2. Briefly stated, the facts of the case are that the assessee is a partnership firm engaged in the business of finance and share trading, e-filed its return of income for Asst. Year 2009-10 on 9.9.2009 declaring loss of Rs. 97,91,666/-. Case was selected for scrutiny assessment. During the course of assessment proceedings, ld. Assessing Officer observed tha....
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.... tribunal in the case of Bharatkumar P Mandalia (ITA No 472/Ahd/2007 dt 30-11-2012), relying upon the decision of Hon'ble Gujarat High Court as well as decision of Hon'ble iTAT, Mumbai in the case of Yatish Trading Co 129 ITD 237 have held as under :- " ".,..9. We have heard the rival submissions and perused the material on record. It is an undisputed fact that the assessee apart from other business is also engaged in the business of purchase and sale of shares and units of mutual funds. The earnings from the sale and purchase of shares is considered as income from business. It is seen that the A.O. has computed the loss on the mutual fund/share transactions carried out of borrowed funds and treated as loss from business. I....
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....Ltd' vs. ACIT (2011) 129 ITD 237 it has been held that when the real purpose and intent to use the borrowed funds was for trading activity and if incidentally resulted some dividend income on the shares purchased for trading then the same would not change the purpose, nature or character of the expenditure. Thus' when interest is incurred for trading activity then the same cannot be said b have been incurred for earning the dividend income In the case of dealer in shares and securities the primary object and intention for acquisition of the shares is to earn profit on tracing of shares. The income on sale and purchase of the shares of a dealer is chargeable to tax. Therefore, if the said activity of purchase and sale a/so incidental....
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.... order of ld. CIT(A) contending that no disallowance of interest expenses is called for in the case of assessee who is a dealer in shares and securities. 7. We have heard the rival contentions and perused the material on record. Solitary grievance of the Revenue is against the order of ld. CIT(A) deleting the disallowance of Rs. 32,75,430/- made u/s 14A of the Act r.w. Rule 8D of the IT Rules. From going through the assessment order, we find that assessee being a partnership firm is having main source of income from financing, share trading and portolio management services and has declared loss of Rs. 97,91,666/-. Apart from earning dividend income of Rs. 10,62,439/- , assessee firm has also earned interest income from banks, short term ....
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....n the order of ld. CIT(A) are relating to those cases where the interest bearing funds have been used for business purposes and dividend income has been earned incidentally. As the facts of the case of assessee do not match with the facts dealt in by Hon. Jurisdictional High Court, ld. CIT(A) was not correct to straight away applying the same to the case of assessee. 9. In the given case, where the assessee has earned exempted income and also has a substantial investments in shares the provisions of section 14A of the Act for disallowance of expenditure incurred in relation to income earning dividend income is clearly attracted. We find that ld. Assessing Officer has applied the gross amount of interest expenditure of Rs. 75,53,433/- in ....